Opinion
655408/2016
06-17-2021
862 SECOND AVENUE LLC, Plaintiff, v. 2 DAG HAMMARSKJOLD PLAZA CONDOMINIUM, Alibaba's Terrace Inc., et al., Defendants.
Paul Hastings LLP, New York, NY ( Jodi Kleinick and Zachary S. Zwillinger of counsel), and Cornicello, Tendler & Baumel-Cornicello, LLP, New York, NY ( Anthony J. Cornicello of counsel), for plaintiff. Moulinos & Associates, New York, NY ( Peter Moulinos and Daniel Levinas of counsel), for defendant 2 Dag Hammarskjold Plaza Condominium.
Paul Hastings LLP, New York, NY ( Jodi Kleinick and Zachary S. Zwillinger of counsel), and Cornicello, Tendler & Baumel-Cornicello, LLP, New York, NY ( Anthony J. Cornicello of counsel), for plaintiff.
Moulinos & Associates, New York, NY ( Peter Moulinos and Daniel Levinas of counsel), for defendant 2 Dag Hammarskjold Plaza Condominium.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 008) 298, 299, 300, 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, 314, 315, 316, 317, 318, 319, 320, 321, 322, 323, 324, 325, 326, 327, 328, 329, 330, 331, 332, 333, 334, 335, 336, 337, 338, 339, 340, 341, 342, 343, 344, 345, 346, 347, 348, 349, 350, 351, 352, 353, 354, 355, 356, 357, 358, 359, 360, 361, 362, 363, 364, 365, 366, 367, 368, 369, 370, 371, 372, 373, 374, 375, 376, 377, 378, 379, 380, 381, 382, 383, 384, 385, 387, 394, 395, 396, 397, 398, 399, 400, 401, 402, 403, 404, 405, 406, 407 were read on this motion for PARTIAL SUMMARY JUDGMENT.
The following e-filed documents, listed by NYSCEF document number (Motion 009) 388, 389, 390, 391, 392, 393, 408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418 were read on this motion to PRECLUDE.
Plaintiff, 862 Second Avenue LLC (Second Avenue), brought this action in 2016 against defendants 2 Dag Hammarskjold Plaza Condominium (Dag) and Ali Baba's Terrace Inc. (Ali Baba). Second Avenue is the lessor of the premises and development rights subject to this dispute, Dag is the lessee, and Ali Baba is the sublessee. In this action, Second Avenue has asserted claims against defendants for payments under the terminated lease and for holding over in the premises and the associated development rights. Dag counterclaims for a judgment declaring that it owns the development rights incorporated into its building. Second Avenue now moves for partial summary judgment under CPLR 3212 (e) (motion sequence 008) and for an order excluding the expert affidavit of Sheldon Lobel (motion sequence 009). Both motions are granted.
BACKGROUND
In 1968, Second Avenue's predecessor entered into a 55-year lease with Dag's predecessor. ( See NYSCEF No. 314.) The lease required the tenant to pay net rent for the property located at 862 Second Avenue in Manhattan, and additional net rent for development rights. ( See id. ) Under § 12-10 of the 1961 New York City Zoning Resolution, Dag's predecessor merged Second Avenue's property and Dag's property into a single zoning lot. In 1973, Dag's predecessor built a 15-story building on Dag's property. ( See NYSCEF No. 312 at ¶ 29.) To build a building with such a large floor area for the lot size, Dag's predecessor used 14,642.1 square feet of the development rights it leased from Second Avenue's predecessor; 2,232.9 square feet of the leased development rights remain unused.
After a series of assignments, Second Avenue became the landlord and Dag became the tenant under the lease. In 2007, Dag sublet the premises to Ali Baba for use as a restaurant. This arrangement was without issue until March 2016, when Dag stopped making rental payments to Second Avenue. ( See NYSCEF No. 312 at ¶ 34.) Second Avenue terminated the lease effective August 17, 2016. Nonetheless, Ali Baba continues to occupy the premises, and Dag continues to use the development rights. ( See NYSCEF No. 376 at ¶ 2.)
This court previously granted Second Avenue's motion for use and occupancy pendente lite. ( See 862 Second Ave. v 2 Dag Hammarskjold Plaza Condominium , 2018 NY Slip Op 31339[U], at *3-*4 [Sup Ct, NY County 2018].) In the use-and-occupancy order, this court found Dag liable for net rent payments as long as its subtenant, Ali Baba, continues to hold over in the premises. Further, this court concluded that Dag is liable for additional net rent for the development rights because "Second Avenue never transferred the development rights to Dag." ( Id. at *3.) The Appellate Division, First Department, affirmed the order on appeal. ( 862 Second Ave. v 2 Dag Hammarskjold Plaza Condominium , 185 AD3d 421, 421 [1st Dept 2020].) The Appellate Division held that "the Court properly rejected Dag's argument that any award for use and occupancy cannot include rental amounts related to plaintiff's lease of its development rights, as well as Dag's unsupported claim that it obtained ownership of [development] rights upon termination of the lease." ( Id. at 421-422.)
Second Avenue now moves, in motion sequence 008, for partial summary judgment under CPLR 3212 (e). Second Avenue seeks an order (1) declaring that all rights under the lease revert back to Second Avenue; (2) declaring that Dag and Ali Baba have been holding over in the premises since the termination date and issuing a writ of assistance directing the Sheriff to deliver possession to Second Avenue; (3) granting judgment to Second Avenue on Dag's counterclaims; (4) declaring that Dag is holding over in 14,642.1 square feet of Second Avenue's development rights and that 2,232.9 square feet of Second Avenue's development rights remain unused; (5) declaring that the unused development rights reverted back to Second Avenue on the termination date and that the used development rights will revert back to Second Avenue when an event triggers reversion, and directing Dag to effectuate reversion with the New York City Department of Buildings; and (6) granting Second Avenue a judgment of $296,551.50 for payments due under the lease from March 2016 to termination, and setting a trial date for the remaining post-termination damages plus costs and attorneys' fees.
In response to Second Avenue's motion for partial summary judgment, Dag introduces the expert affidavit of Sheldon Lobel, Esq. Lobel is an attorney who has over 50 years' experience practicing New York zoning and land use law. He disputes the determination of Second Avenue's expert, architect Charles Alwakeel, who calculated that Dag is using 14,642.1 square feet of Second Avenue's development rights. ( See NYSCEF No. 379 at ¶¶ 6-8.) In Lobel's professional opinion, the development rights that Dag's predecessor used under the lease do not revert back to Second Avenue after the lease's termination. Instead, he asserts that the development rights are "lawfully incorporated into [ ]Dag's building" and that Second Avenue "has no claim of ownership to any of the floor area incorporated into [ ]Dag's building." ( Id. at ¶ 7.) In motion sequence 009, Second Avenue moves in limine for an order to exclude Lobel's affidavit and to preclude Lobel from offering expert testimony on this motion.
Motion Sequences 008 and 009 are consolidated here for disposition. The motions are granted.
DISCUSSION
I. Motion for Partial Summary Judgment (Mot Seq 008)
Under CPLR 3212, a court may grant summary judgment if the movant is "entitle[d] to judgment as a matter of law." ( Alvarez v Prospect Hosp. , 68 NY2d 320, 324 [1986].) The movant must establish that there is no material issue of fact. ( Vega v Restani Constr. Corp. , 18 NY3d 499, 503 [2012].) If the movant meets that burden, the non-movant must provide sufficient evidence to establish a material dispute of fact. ( See Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP , 26 NY3d 40, 49 [2015].) The court views the facts in the light most favorable to the nonmovants. ( See Ortiz v Varsity Holdings, LLC , 18 NY3d 335, 340 [2011].)
A. Writ of Assistance Against Dag and Ali Baba
Second Avenue asks this court to declare that the defendants are holding over in the premises and to issue a writ of assistance to have them ejected. This request for relief is granted without opposition. Dag agrees with Second Avenue's claim that Dag and Ali Baba have been holding over in the premises and that a writ of assistance against both defendants should be granted. (NYSCEF No. 376 at ¶ 2.) Ali Baba has not opposed this claim, either. The court grants an order directing the New York County Sheriff under Real Property Actions and Proceedings Law § 221 to eject the defendants from the premises located at 862 Second Avenue in New York County. That order, however, is stayed pending the lifting of the current COVID-19-related moratorium on commercial evictions.
B. Ownership of the Development Rights
Second Avenue requests that the court declare that all rights under the lease, including the development rights, have reverted or will revert back to Second Avenue. The parties dispute whether this court and the Appellate Division, First Department, already have decided that the rights revert back to Second Avenue. ( See NYSCEF No. 299 at 7-8 [Second Avenue]; NYSCEF No. 385 at 28 [Dag].) This court agrees with Second Avenue that the courts previously decided this issue.
In the use-and-occupancy order, this court determined "Second Avenue never transferred the development rights to Dag," such that the rights reverted back to Second Avenue when the lease terminated. ( 862 Second Ave. , 2018 NY Slip Op 31339[U], *3.) The Appellate Division affirmed that decision; and it labeled as "unsupported" Dag's claim that the rights did not revert. ( 862 Second Ave. , 185 AD3d at 422.) That holding is law of the case here. This court therefore rejects Dag's attempt to relitigate on this motion the issue of ownership of the rights.
This court is unpersuaded by Dag's argument that the impossibility doctrine prevents the court from declaring that the development rights revert to Second Avenue. A party can escape liability when circumstances make it impossible to perform contractual obligations. ( Kel Kim Corp. v Cent. Mkts., Inc. , 70 NY2d 900, 902 [1987].) Whether or not Second Avenue can use the rights immediately is immaterial; Dag still can transfer them. And although Dag contends that it is impossible to transfer the used development rights unless it demolishes part of its own building, Second Avenue does not request this impractical relief. Instead, it asks the court to direct Dag to transfer the rights to Second Avenue when an event triggers reversion and makes transfer feasible, such as when Dag redevelops its building. That is not an impossible form of relief.
This court grants summary judgment on the branch of Second Avenue's motion for summary judgment that seeks a declaration about the development rights. The 2,232.9 square feet of unused development rights reverted to Second Avenue when the lease terminated and are available for Second Avenue's immediate use. Further, Dag must transfer the 14,642.1 square feet of used development rights when an event triggers reversion. For the same reasons, the court also grants summary judgment to Second Avenue dismissing Dag's counterclaim for a declaration in Dag's favor on the development rights (and the associated counterclaim for attorney fees and costs).
C. Pre-Termination Damages
Second Avenue contends that Dag failed to make payments before the lease expired. Second Avenue claims damages for unpaid rent, property taxes, and water and sewer charges accrued from March 1, 2016, to August 17, 2016, totaling $296,551.50.
It is undisputed that the lease terminated on August 17, 2016. ( See NYSCEF No. 385 at 1.) Dag argues that newly discovered financial statements create a material dispute of fact about whether Second Avenue received rent payments before termination. ( See id. at 35.) Dag's previous managing agent, Metropolitan Pacific Properties Inc. (MetPac), prepared a financial statement that lists monthly rent payments of $37,346.96 to Second Avenue covering the pre-termination period. ( See NYSCEF No. 378.) But there is no evidence that Second Avenue cashed any payments. Rather, the same document places those payments in a list of "outstanding checks." ( Id. ) Viewed in the light most favorable to Dag, the financial statements do not create a fact dispute about whether Second Avenue received payments from March 1, 2016, onwards. The court grants summary judgment to Second Avenue for damages covering the period of March 1, 2016, through August 17, 2016, in the amount of $296,551.50.
The question whether Dag can properly rely on this new evidence uncovered after the close of discovery therefore is academic.
Dag is also liable for damages arising from its use and occupancy of the premises and development rights since August 18, 2016. This court orders an immediate trial under CPLR 3212 (c) to determine post-termination damages. Both parties waived their right to a jury trial on damages when they agreed to a bench trial. ( Cf. Trocom Constr. Corp. v Consol. Edison Co. of NY, Inc. , 7 AD3d 434, 438 [1st Dept 2004] ["Had the nisi prius court not granted Trocom partial summary judgment ... Con Ed would have been entitled to a jury trial on damages. As Con Ed did nothing which would constitute a waiver of that right, the court erred in issuing a reference order."].) The court refers the determination of damages to a special referee for a hearing to determine the damages that Second Avenue is entitled to for Dag's use and occupancy of the premises and development rights since August 18, 2016, taking into account Dag's payments under the use-and-occupancy order.
II. Motion to Preclude (Mot Seq 009)
Second Avenue moves to preclude the expert testimony of Dag's expert, Lobel. A trial court has wide discretion to determine the admissibility of expert testimony. ( Price v NYC Hous. Auth. , 92 NY2d 553, 558 [1998].) New York law allows expert testimony to provide specialized or technical knowledge. ( See e.g. State v Lourdes Hosp. , 100 NY2d 208, 210 [2003].) Although an expert may need to refer to the law, an expert may not usurp the court's function of interpreting the law. ( Colon v Rent-A-Center, Inc. , 276 AD2d 58, 61 [1st Dept 2000].) The motion to preclude is granted.
The affidavit of Dag's expert contains only legal analysis and conclusory statements—and contradicts this court's own prior holding in the June 2018 use-and-occupancy order. Dag's expert does not dispute the calculations of Second Avenue's expert, Alwakeel. (NYSCEF No. 409 at 12.) Instead, he interprets the 1961 Zoning Resolution and New York Court of Appeals case law to conclude that the used development rights do not revert to Second Avenue; and he claims that "the Alwakeel Affidavit inaccurately summarizes the law as applicable to zoning lots ... and therefore reaches incorrect conclusions as to [ ]Dag's use and ownership of the subject Development Rights." (NYSCEF No. 379 at ¶ 5.) This court has already held otherwise. As discussed above, the development rights did indeed revert to Second Avenue. Since the affidavit of Dag's expert contains only legal analysis that this court has already rejected, it is excluded.
Dag's argument that New York courts permit zoning-law experts lacks merit. The case law Dag cites in support of this proposition is not on point. In Kettaneh v Bd. of Stds. & Appeals of the City of New York (85 AD3d 620, 623 [1st Dept 2011] ), the Board of Standards and Appeals accepted expert testimony containing economic analysis when considering building permit applications. The expert testimony was accepted by the Board; the courts then performed a rational review of the Board's determination. The procedural posture of this case differs. This Court is not reviewing an agency's determination. The court is directly responsible for determining whether the expert testimony is admissible. Although the Board may choose to receive expert testimony on questions of law, the courts do not accept expert testimony on how to interpret New York zoning law.
Dag's argument that Second Avenue's motion in limine is premature also is unpersuasive. A party may make a motion in limine to preclude expert testimony even before the court sets a trial date. ( Parker v Mobil Oil Corp. , 7 NY3d 434, 443 [2006].) And a court may exclude evidence if the "relevance, or lack of relevance, [of the evidence can] be determined in context." ( Speed v Avis Rent-A-Car , 172 AD2d 267, 268 [1st Dept 1991].) Here, this court has a sufficient basis to assess the relevance and admissibility of the Lobel affidavit at summary judgment—and to conclude that the affidavit should be excluded.
This court does not agree with Dag's contention that Second Avenue's motion in limine is effectively substituting for a motion for summary judgment. Although Second Avenue's motion to exclude the Lobel affidavit is related to its motion for partial summary judgment, the former does not substitute for the latter. A motion requesting the court to rule on an evidentiary issue is distinct from a motion requesting the court to grant judgment on a claim.
Regardless, even if the affidavit of Dag's expert were admissible, it would not affect this court's resolution of the motion for partial summary judgment. The testimony of Dag's expert is based on the erroneous assumptions that "there has been no authoritative interpretation by the ... Courts" on the ownership of the development rights and that this "court cannot make a final determination as to the ownership of the Development Rights." (NYSCEF No. at ¶¶ 16-17.) The court previously determined the development rights reverted to Second Avenue. Expert testimony that rests on a mistaken understanding of the facts of the case cannot create a material dispute of fact.
Accordingly, for the foregoing reasons it is hereby
ORDERED that the branch of Second Avenue's motion under CPLR 3212 seeking summary judgment declaring that Dag and Ali Baba have been holding over in the premises since the lease terminated on August 17, 2016, and issuing a writ of assistance against Dag and Ali Baba directing the Sheriff of New York County to deliver possession of the premises to Second Avenue (mot seq 008) is granted; and it is further
ORDERED that any eviction of Dag and Ali Baba by the Sheriff, and delivery of the premises to Second Avenue, is stayed until New York's state moratorium on commercial evictions is lifted; and it is further
ORDERED that the branch of Second Avenue motion under CPLR 3212 seeking summary judgment declaring that all rights under the lease revert to it (mot seq 008) is granted; and it is further
ORDERED that the branch of Second Avenue's motion under CPLR 3212 seeking summary judgment dismissing Dag's counterclaims (mot seq 008) is granted; and it is further
ORDERED that the branch of Second Avenue's motion under CPLR 3212 seeking summary judgment declaring that Dag is holding over in 14,642.1 square feet of Second Avenue's development rights and that Second Avenue owns 2,232.9 square feet of development rights that Dag has not used (mot seq 008) is granted; and it is further
ORDERED that the branch of Second Avenue's motion under CPLR 3212 seeking summary judgment declaring that the 2,232.9 square feet of unused development rights reverted to Second Avenue on the termination date and that the 14,642.1 square feet of used development rights will revert to Second Avenue, and directing Dag to effectuate a reversion when an event triggers reversion (mot seq 008) is granted; and it is further
ORDERED that the branch of Second Avenue's motion under CPLR 3212 seeking summary judgment in its favor with respect to all payments owing under the lease through the termination date (mot seq 008) is granted; and it is further
ORDERED that Second Avenue's motion to exclude Sheldon Lobel's affidavit at summary judgment and to preclude Lobel from offering expert testimony either at summary judgment or at any trial or hearing in this matter (mot seq 009) is granted; and it is further
ORDERED that Second Avenue is awarded a judgment against defendant of $296,551.50 for payments due under the lease from March 1, 2016, through August 17, 2016, plus interest running from August 17, 2016; and it is further
ORDERED that the issue of the damages that Dag owes for holding over in the premises and development rights from August 18, 2016, onwards, plus reasonable attorney fees and costs and disbursements, is referred to a special referee to hear and report; and it is further
ORDERED that plaintiff will serve a copy of this order with notice of its entry on all parties; on the Special Referee Clerk in the office of the General Clerk (60 Centre Street, Room 119), who is directed to place this matter on the calendar of the Special Referee's Part for the earliest convenient date; and on the office of the County Clerk, which shall enter judgment accordingly.